Succession Planning for your Business

What is a succession plan?

A succession plan is the identification of the most effective method for transfer of management, control, ownership, knowledge and skills of your business.

The transfer may be either inter-generational or to a non-family member, and should be structured based on your circumstances and goals.

The implementation of such a plan is performed in consultation with the appropriate professional advisors.

Who benefits from a succession plan?

All businesses can benefit from a properly drafted and implemented succession plan. Absent proper planning, you and your family may be faced with unexpected costs, including tax costs. You have worked hard to develop and enhance your business during your life and it is equally important to plan what will happen to it in the future.

What are the benefits?

There are numerous legal and practical benefits to implementing a succession plan including:

  • Obtaining exemptions or deferral of various taxes;
  • Business continuity; and
  • Providing a clear direction for your business and a clear definition of the responsibilities of all involved.

What will I need to do?

Step One:  Define your goals

If you are interested in formalizing a succession plan you should first determine what your desired end result is with the plan (such as retirement and transfer to a family member or partial retirement) and, if appropriate, discuss your plan with your family members.

Step Two:  Speak to a professional

Once you have determined your goals it is time
to discuss your options with a professional advisor such as a lawyer, financial planner or accountant. The professional advisor will request certain financial and corporate information, which is required in order to provide worthwhile advice with respect to your succession planning. On reviewing the information, your advisors can assist you in weighing your various options and structuring your plan in the best way to minimize costs and avoid or defer taxes.

Step Three:  Create the plan

Once your professional advisor has presented you with the various options, you will need to make decisions with respect to which option is preferable. Your professional advisor can then devise a succession plan to facilitate the future transfer.

This plan may include preparing documentation to reorganize the financial or corporate structure of the business including incorporating companies, settling family trusts and migrating and transferring real property.

Step Four: Implement and monitor the plan

Finally, your professional advisor will assist you in implementing the succession plan, including preparing the necessary documentation required and referring you to the appropriate individuals for further advice. Your advisors may either assist you in monitoring the plan on an ongoing basis or give you the tools to do so yourself.

When should I start?

Now. Ideally you should start planning for the succession of your business now to ensure that any future transfer of your business can be structured in such a way to best benefit you and your family. Further, to maximize your tax savings with a succession plan it is important that the plan be implemented as soon as possible. It is important to consult with a professional if you intend to transfer your business to a family member or to an unrelated third party in the future.

Patterson Law’s Expertise

Patterson Law is a full service firm comprised of lawyers with a wealth of experience and knowledge, including experience in structuring succession plans for all types of businesses and tax planning.

Our lawyers would be pleased to work with you and your other professional advisors as appropriate to structure a succession plan best suited to your goals.


This memorandum is not intended to contain advice specific to your situation. Your use of this memorandum should be reviewed with your legal adviser.